Global observers praise NZ for squashing Covid-19, but warn economy will pay the price

May 1, 2020
AUCKLAND, NEW ZEALAND - MARCH 25: Closed notices relating to the COVID-19 virus are seen outside the entrance to the Auckland War Memorial on March 25, 2020 in Auckland, New Zealand. (Photo by Phil Walter/Getty Images)

New Zealand’s success in tackling the coronavirus has won praise from observers around the world, but there are warnings that the strategy will cost the economy dearly.

Prime Minister Jacinda Ardern’s “go hard and go early” approach has seen the Covid-19 case curve not only flattened but crushed, with new cases per day now in single figures for almost a fortnight and a death toll of just 19 compared with tens of thousands in some countries.

However, the extremely restrictive Level 4 lockdown, which lasted for more than four weeks, followed by a slight easing in Level 3, is seen by some international analysts as making it hard for the economy to recover quickly.

The combination of businesses prevented from operating and closed borders preventing tourism are seen as a considerable risk.

The US-based Wall Street Journal compared the stances taken on the two sides of the Tasman and noted the New Zealand version had been ranked as among the most severe in the world by Oxford University’s “stringency index”. Australia’s lockdown was looser - takeaways, for example, were never banned, allowing the hospitality industry to continue working to some extent.

“Economists expect New Zealand's economy to contract by more than 20% in the three months through June, compared with the quarter immediately prior, whereas Australia's economy is expected to shrink some 13% over the same period,” the Wall Street Journal reported.

It quotes the ANZ bank’s predictions that New Zealand's economy will be 10.4% smaller at the end of 2020 than it was at the start of the year, while the figure for Australia is forecast to be down 4.7%.

The Australian newspaper described New Zealand as now having a “fried economy”, and referred to National party leader Simon Bridges’ view that the country needs to come out of lockdown quicker than the Government has planned – while also noting that he faced a strong public backlash for his comments and that Ms Ardern is enjoying strong support in polls.

The Opposition Leader said the Government needs to flatten the curve without flattening the economy.

“New Zealand has emerged from its level-four Covid-19 lockdown with big questions over whether the additional business-sapping restrictions were worth the cost,” the Australian’s Environment Editor Graham Lloyd wrote.

However, the Financial Times sees a positive potential future for New Zealand. Columnist Simon Kuper painted a scenario where a Covid-free status and its geographical distance from much of the world would be an economic advantage.

“If New Zealand succeeds, then for the first time it will be a better place to do business than New York or London: the ultimate remote location for the age of remote working.”

Kuper adds: “Foreign tech firms, research departments and marketing agencies could airlift their locked-down staff to a gorgeous tourist resort with good coffee such as Queenstown, now devoid of tourists.”

"The key issue here is how quickly is the economy going to go back to pre-Covid levels? I suspect it's going to be quite some time,” he said.

For  National Geographic , however, the need to keep borders closed until a vaccine is developed and widely available is a serious risk for New Zealand.

“That’s a tough prospect for a country where tourism — New Zealand’s largest export industry in terms of foreign exchange earnings — accounts for 10 per cent of GDP and nearly 15 per cent,” wrote Aaron Gulley, a US-based reporter who found himself stuck in New Zealand for the four weeks of lockdown.

He points out that some forecasts suggest the recovery will not happen until 2024. On this point, analysts are in agreement – the road back will be long. As it will be worldwide when the pandemic is finally over.

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